Gold Pauses As Silver, Miners Heat Up; Barrick, Silver Wheaton Gain

By Murray Coleman

While gold’s record run is poised to take a breather Friday, silver continues to advance and miners are opening in positive territory.

The SPDR Gold Trust (GLD) is down slightly while the iShares Silver Trust (SLV) is up more than 1%. In futures, August gold is down $3.10 to $1,586.20 an ounce. Meanwhile, September silver on the Comex is rising by 36 cents to $38.73 an ounce.

The government reported this morning that inflation in June dropped for the first time in a year as prices for gasoline and other energy-related products continue to fall. Overall consumer prices fall 0.2%, in-line with estimates.

Silver’s getting a bit of a boost from a Fed report that showed U.S. industrial production increased in June, though less than had been anticipated by some economists. Also, the data showed that industries used 76.7% of their capacity — the same as May but didn’t fall. Capacity still remains below prerecession highs.

The U.S. Dollar Index is up 0.2%.Fed Chairman Ben Bernanke discounted any immediate need for more quantitative easing yesterday, adding that inflation was higher now than it was late last year. The remark has give a lift to the dollar.

Late Thursday, Standard & Poor’s said it could put the U.S. on credit watch later this month if Congress hasn’t raised the $14.29 trillion debt ceiling. The Treasury had given an Aug. 2 deadline.

MF Global’s Edward Meir noted this morning that metals are trading quietly so far. “Investors are most likely in the throes of discounting an imminent agreement in Washington, which while offering a measure of relief, will likely fall short of the more ambitious goals set out earlier in the week,” he wrote. “As a result, the dollar could weaken in the days ahead, providing an additional measure of support for commodities, at least until further market tensions in the Eurozone swings the pendulum back the other way.”

The European Banking Authority will publish the results today of stress tests on 91 banks. Analysts expect 10-15 failures, which might actually be taken in somewhat of a positive light given that the last round only singled out one troubled bank.

Some considered such findings an indication that the tests were more PR than substantive.

Miners are gaining momentum. The Market Vectors Gold Miners ETF (GDX) is up 0.4% as top holding Barrick (ABX) is moving higher.

The iShares Silver Trust (SLV) is up 0.7% as Pan American Silver (PAAS) and Silver Wheaton (SLW) make positive gains.

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There are 2 comments

JULY 16, 2011 6:52 P.M.

Rick Larson wrote:

Murray, love the blog but please make sure that when you post some incredible sounding numbers, like you did with the Toqueville Gold Fund, that you also include a longer period of time when gold was absolutely terrible--like from the peak in 1980 to 2006! People, like small investors, will see that about Toqueville, already have been tweaked by the media about "gotta into gold" and might start investing here at the top--which is what they normally do on any stock sector, come to think of it (tech in 1999-2000, oil and gas in 2008). Those ten year numbers on gold funds are skewed: much of those returns came in a few short years, not steadily over ten years, as mom and pop would like to believe. The next fleecing in the markets will come from mom and pop buying gold, silver and bonds--all now at historic prices, save for silver--at today's prices. They are always late and always wrong. All the best!

JULY 18, 2011 3:58 P.M.

L. D. wrote:

How about having a coin collection with alot of silver ?
Should I set on it and save to sell when silver has stablized @
a high rate for a long time?

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As exchange-traded funds and other investing vehicles have ballooned in number, the task of figuring out what works well and what doesn’t has only gotten harder. Barrons.com’s Focus on Funds looks under the hood of ETFs, mutual funds and hedge funds for overlooked values, actionable ideas and the latest pitfalls for fund investors.

Chris Dieterich has covered the U.S. stock market for The Wall Street Journal and Dow Jones Newswires. He is a graduate of Regis University and the Missouri School of Journalism.